28 



HARDWOOD RECORD 



H. S. Hayden. Hayden & Westcott Lumber Company, Chicago, III. 

 J. Gibson Mcllvain, Jr., J. Gibson Mcllvain & Co., Pliiladelphia, Pa. 

 A. G. Fritcliey, Lamb-Fisli Lumber Company, Charleston, Miss. 

 C. M. Clark, Swann-Day Lumber Company, Cincinnati, O. 

 W. B. Earle, Wisconsin Land & Lumber Company, Hermansville, 

 Mich. 



W. D. Young. W. D. Young & Co., Bay City, Mich. 



L. W. Crow, Mears-Slayton Lumber Company, Chicago, 111. 



E. A. Lang, Paepcke-Leicht Lumber Company, Cliicago, 111. 



F. M. Mowbray, Mowbray & Robinson, Cincinnati, O. 

 F. B. Robertson, Anderson-Tully Co., Memphis, Tenn. 

 George D. Burgess, Russe & Burgess, Memphis, Tenn. 



Van B. Perrine, Perrine-Armstrong Company, Fort Wayne, Ind. 



Thomas W. Fry, Charles F. Luehrmann Hardwood Lumber Company, 

 St. Louis, Mo. 



A. P. Steele, Carrier Lumber & Manufacturing Company, Sardis, 

 Miss. 



J. J. Linehan, Linehan Lumber Company, Pittsburg, Pa. 



T. S. Estabrook, Estabrook-Skeele Lumber Company, Chicago, IK. 



J. W. Taylor. The Domestic Lumber Company, Columbus, O. 



Charles E. Dickinson, E. Sondheimer Company, Memphis, Tenn. 



I. F. Balsley, Palmer & Semens Lumber Company, Pittsburg, Pa. 



M. F. Greene, Davidson, Hicks & Greene Company, Nashville, Tenn. 



W. J. Mingus, Mingus & Rutter, Philadelphia, Pa. 



H. E. Scliadt. The Hyde Lumber Co., South Bend, Ind. 



Morality in Business 



The Timber Trades Journal of England, in a contributed artido, 

 strikes a chord which should be in direct harmony not only witli 

 British import, but with the American lumber business as well. 

 The writer claims that the present uncertainty is a product rather of 

 too nnieh business than too little. He says in part: 



There has been little or no diminution in the number of 

 failures during the past twelve months, and the timber trade 

 has by no means escaped. The causes of these business 

 disasters are numerous, in spite of the stereotyped ones 

 generally given, viz., bad trade and want of capital ; and it is 

 with one of the causes not usually admitted that I propose 

 to deal. 



Several instances have come to li.sht recently in which 

 the people concerned could not blame lack of orders, and for 

 years had quite sufficient money to carry on a legitimate 

 business. In fact, some of them have been doing a very large 

 trade right up to the time of their failure, and indications 

 are not wanting to show that their ambition has been to 

 present a big import list and otherwise carry on an exten- 

 sive business. To accomplish this they have imported goods 

 without any reasonable prospects of selling them at a profit, 

 neither has their outlet been such as to justify them in put- 

 ling the goods into stock. And here comes the chief cause 

 for my complaint. Instead of being content with a legitimate 

 turnover and curtailment of their purchases within meas- 

 urable distance of profitable sales, they have lost their heads 

 and continued to buy largely long after their finances have 

 been exhausted, with the result that the day of reckoning 

 has come, and it has found them owing huge sums of money 

 right and left, and that they have, in reality, been carrying 

 on their business with their creditors' money. Not only 

 lliat, liut they have actually been competing against those 

 to whom the money belongs. 



How many supposedly successful firms in our own country are doing 

 business along these very lines today? Their very existence depends 

 upon the large volume of sales, for it is a prerequisite under their 

 method of trading that they be considered large buyers. As soon 

 as they evince a tendency to suljstitute for this policy a more logical 

 method of acquiring stock, more in accordance with tlie law of supply 

 and demand, their unique reputation is shattered. As a consequence, 

 they must maintain an extensive otEce equipment and force, must 

 keep constantly in the market for large volumes of stock, which, 

 when they are acquired, are of necessity dumped on the market with- 

 out reasonable regard for the question of profit or loss. They not 

 only work against their own interest, but work a hardship on nianj- 

 a lumberman endeavoring to do a legitimite business. It is this 

 same method, the practice of selling short, which gives to the modern 

 stock exchange the reputation for speculation and uncertainty, whicli 

 it boars today. Fundamentally, there is nothing illegitimate in trad- 

 ing in stock, but it is the practice of selling short in the stock 

 market whicli puts the business on the basis of a speculation. 



Harry Eankin & Co. are suggesting to their members the value of 

 making weekly inspections of their own plants and forwarding copies 

 of these reports to the company. The plan has already been adopted 

 by quite a number of their clients. 



Harry Rankin & Co. believe that if this plan is carried out by the 

 entire membership, it will result in such a reduction of the fire risk 

 as to make each one an even greater saving in the cost of their in- 

 surance than has resulted from the regular but less frequent in- 

 spections made by the company's representatives. 



In connection with this suggestion there has been sent out a 

 pamphlet entitled "Inspection Hints," for the guidance of each 

 institution's own inspectors. Accompanying it is an inspection blank 

 designed to fit the average plant, but special blanks are furnished ou 

 request. Each report of the company's inspectors will be employed 

 as a check upon and supplementary to the last previous reports of the 

 individual concern's inspector. It is figured that by such co-opera- 

 tion every plant can doubtless be kept in practically perfect condi- 

 tion and approximately free from fire hazard. 



The Manufacturing Lumbermen's Underwriters, under the man- 

 agament of Harry Eankin & Co., has achieved a very enviable suc- 

 cess in lumber insurance annals. Its own savings to its members 

 are too well known to be elaborated on at this time, and the in- 

 creasing business of the organization is a self-evident fact that the 

 company 's clients are thoroughly satisfied with the handling of their 

 insurance. 



Helping Their Clients Save Money 



That foremost lumber insurance organization, the Manufacturing 

 Lumbermen's Underwriters of Kansas City, Mo., of which Harry 

 Eankin & Co. are managers, is constantly lending its efforts to as- 

 sisting its patrons in saving money on insurance cost. Just now 



Lumber Sales Cost 



It is doubtful if any commodity going into universal use is mar- 

 keted on as low a percentage of cost as is lumber. In other words, a 

 buyer of lumljer gets nearer one hundred per cent of value in material 

 purchased than he does in securing anything else that he might buy. 

 It is generally conceded that when a man pays three thousand dollars 

 for an automobile he secures only about fifteen hundred dollars' worth 

 of automobile and the remainder of the expenditure has gone for 

 exploitation and sales cost. A manufacturer of a leading line of 

 merchandise purchased very extensively by the lumber manufacturing 

 trade confessed to the Eecord a few days ago that his advertising 

 sales and distribution cost was nearly equal to his manufacturing 

 cost. 



It does not require a blue print to demonstrate that a large num- 

 ber of the food products on the market today represents in retail 

 price much less than fifty per cent of producing cost, while the 

 remainder has entered into advertising and sales expenses. Beyond 

 qviestion the cheapest sales method that can be employed is advertis- 

 ing, when the money is 'judiciously expended. It is possible that lum- 

 bermen are overlooking the possibilities of investing more money in 

 general advertising and exploitation expense. Think of the money 

 being expended today by railroads, notably in the daily and maga- 

 zine press, in exploiting not only their passenger, but their freight 

 service as well. Think of the money that is expended by the pack- 

 ing industry, soap manufacturers, furniture manufacturers and other 

 chief lines of production in exploiting their lines of product. 



Sales expense in every line has materially increased during the 

 past few years. A prominent manufacturer advised the Eecord 

 some seven years ago tliat his sales expenses on lumber for the year 

 previous had been nineteen cents a thousand. A short time ago he 

 was reminded of this statement and asked what his sales expense 

 account figured in 1910. He said: "It was a good deal nearer one 

 i-lollar and nineteen cents than nineteen cents." 



Still the initial statement of this article is undeniably true, that 

 it is doubtful if there is any commodity going into general use 

 where the percentage of sales cost is as low as it is on lumber. 



Sales expense in liunlier ranges from one to possibly six per cent, 

 with an average of, say, three per cent. This includes advertising, 

 salesmen and general traveling expense. It is a question whether 

 it is not possible that lumber producers and merchants could not 

 expend a larger percentage in advertising and still reduce the gen- 

 eral percentage of their sales expenditures. 



It is a subject worth the consideration of the trade. 



